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Sterling Radio Stations, Inc. v. Weinstine

Case Date: 01/31/2002
Court: 1st District Appellate
Docket No: 1-99-2043 Rel

FOURTH DIVISION

January 31, 2002

No. 1-99-2043

STERLING RADIO STATIONS, INC., )
f/k/a Seith-Serafin Communications, Inc.,                                                   )
f/k/a Great Lakes Network, Inc.; and ) Appeal from
ALEX R. SEITH,                                                                                      ) the Circuit Court
) of Cook County.
Plaintiffs-Appellants, )
)
v. ) No. 95-L-09661
)
LESTER S. WEINSTINE; ROBERT L.ELLISON; )
WEINSTINE, SHIRK, MELLOTT and LEEMON;                                  ) Honorable
and KLOCKAU, McCARTHY, ELLISON and ) David R. Donnersberger,
MARQUIS,P.C., ) Judge Presiding.
)
Defendants-Appellees. )

JUSTICE THEIS delivered the opinion of the court:

Plaintiff Alex R. Seith(1) appeals the trial court's grant ofsummary judgment to defendants Lester S. Weinstine, Robert L. Ellison,Weinstine, Shirk, Mellott & Leemon, and Klockau, McCarthy, Ellison &Marquis, P.C. (collectively, defendants), in this legal malpracticeaction. Seith contends that the trial court erred in finding thatSeith suffered no damages as a matter of law and argues that hisdamages included: (1) $100,000 in attorney fees incurred in appealingthe underlying suit in which the alleged legal malpractice occurred,and (2) $300,000 paid by a corporation in which he was a shareholderto satisfy the judgment entered against him in the underlying suit. For the reasons that follow, we affirm in part and reverse in part andremand for further proceedings.

On December 5, 1986, Sterling Radio Stations, Inc. (SRS), enteredinto an agreement to buy the WSDR radio station in Sterling, Illinois,from WSDR, Inc., and all of its individual shareholders. Pursuant tothe purchase agreement, SRS executed a promissory note for thepurchase of the radio station, which Seith, a shareholder of SRS,guaranteed. After making several payments on the note, SRS claimedthat the WSDR sellers made misrepresentations, breached warranties,and violated restrictive covenants. SRS subsequently stopped makingpayments and defaulted on the promissory note. Seith also refused topay on the note in his capacity as guarantor.

On March 13, 1992, the WSDR sellers filed suit in WhitesideCounty, Illinois (Whiteside Action), against SRS and Seith, seekingpayment on the promissory note and guaranty. On June 10, 1994, Seithand SRS hired defendants to defend them in the Whiteside Action.

The trial court found in favor of the WSDR sellers, finding SRSliable on the note and Seith liable on the guaranty. Judgment wasentered against SRS and Seith, jointly and severally, in the amount of$778,460.38. Seith then hired new attorneys, Schopf & Weiss, and paidthem approximately $100,000 to represent him in his unsuccessfulappeal.

In August 1994, SRS transferred substantially all of its assetsto LH&S Communications, Inc. (LH&S), through a series of transactionsthat involved the direct sale of some assets and the execution of along-term lease for others. At the time of the transfers, Seith wasthe largest common shareholder of LH&S stock and also held over 3million shares of LH&S' preferred stock.

In 1996, the WSDR sellers filed suit against SRS and LH&S (StateCourt Action), as a result of the transfers of SRS' assets to LH&S. On May 5, 1997, an involuntary petition under chapter 7 of the UnitedStates Bankruptcy Code was filed against SRS. 11 U.S.C.